---------- Forwarded message ----------
From: Randy Shingai
Date: Fri, May 8, 2015 at 11:52 AM
Subject: demand for retail?
To: City Council <citycouncil@cupertino.org>
From: Randy Shingai
Date: Fri, May 8, 2015 at 11:52 AM
Subject: demand for retail?
To: City Council <citycouncil@cupertino.org>
Dear Cupertino Council,
When
Councilman Paul asked me a question about retail at the recent Council
meeting, I took it on faith that retail needs incentives in Cupertino.
However, after googling around a bit, I'm wondering what the situation
really is with respect to retail.
Consider these articles (I have added emphasis on some of the content):
The area in general has experienced a marked increase in retail rents. For example, rents in the Silicon Valley have gone as high as $65-$70 for small spaces and $30 for big box space. In San Francisco, retail rents can range from $38 per square foot on average all the way up to over $125 plus per square foot for a prime location. More retail space is slated to come online with the new residential developments planned in SF but restrictions to formula retail have been further tightened to include companies with 11 stores or more worldwide.For the shopping center sector, the construction of brand new centers has been largely hindered by prohibitive entitlement costs that include impact, permit, planning and site utility fees. These can range from $6.50 per square foot to $41 per square foot for a 15,000 SF building. As a result, investors and developers are focusing their attentions on acquiring distressed centers and repositioning them by way of adaptive re-use. This is a much less costly approach that can ensure them a successful exit strategy and the necessary upside and return their investors require.Retailers seeking to take advantage of the robust job growth, scant supply and high barriers to entry in the Bay Area are keeping the pressure on one of the tightest shopping center environments in the nation.Traditional hard good retailers are finding it increasingly challenging to grow market share and retain customers. Consumers continue to move spending on these items online in search of more convenience and lower cost. The balance of power has shifted toward food services and experiential retail. Quick serve restaurants continue to expand at a fast pace drawing consumers away from sit down restaurants and trading up from fast food. Experiential retail, in the guise of salons, gyms, and personal services also continue to grow as these services cannot be replicated online.
Vacancy remained minimal across the region. The 3Q 2014 Bay Area vacancy rate of 4.0% is down 0.2% from the previous quarter.
So
with respect to Vallco, has everything that can be done to make Vallco
successful really been done? Or has Sand Hill Property done like Cortez
and orchestrated a "burn the ships" situation at Vallco, so that their
plan for development at Vallco will be allowed to go forward? I think
this is clearly the case. Consider this list of comments to the GPA,
dated November 22, 2014 Note that item 13, a comment letter dated
10/9/14 was later withdrawn by item 16, dated 10/13/14.
Xiaowen Wang thoughtfully saved the 10/9/14 letter that was withdrawn on 10/13/14. Please read the letter and ask yourself if it credible that Sears had given up on retail at Vallco on 10/9/14?
Summary of Concerns
In
summary, we understand the City's desire to meet the demand for jobs in
the area and to meet its regional housing requirements. However, we are
concerned that the increase in land use densities from the Proposed
Project will be inconsistent with the South Vallco Master Plan and will
negatively affect the Sears property and store operations. These
concerns are summarized below:
•
The densification of nearby land use will significantly increase
congestion and introduce additional traffic impacts, making it more
difficult to access the Sears site. The increased travel time to the
Sears site, and increased circulation and parking time may make it more
likely that customers will find alternate locations to meet their
shopping needs. A traffic impact fee program is proposed as the solution
to the identified traffic impacts. While this may ultimately help
address Citywide circulation needs, we are concerned that the fee
program will not sufficiently provide the congestion relief when and
where the impacts are generated.
•
The traffic analysis appears to understate the impacts of the Proposed
Project by not evaluating Saturday conditions or conditions at Perimeter
Road and Stevens Creek Boulevard; by assuming an extensive reduction in
retail square footage at South Vallco Park Gateway West, and by
assuming the implementation of projects in the baseline scenario that
may not be fully funded and programmed.
•
The modification of zoning within the South Vallco Park Gateway West
area may lead to a reduction in commercial square footage within the
Vallco Shopping District, as assumed in the traffic analysis. This may
reduce the regional attractiveness of the shopping area, to the
detriment of existing retail businesses. It also is contrary to the
policies enacted as part of the Heart of the City Specific Plan and
South Vallco Master Plan, both of which emphasize maintaining the
character of the regional shopping center and compatibility of existing
and future uses.
Please
include this e-mail in the public comments for the public hearing on
the GPA tentatively scheduled for the May 19, 2015 City Council meeting.
Thank you,
Randy Shingai
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